Foxtons has lifted its profit forecast and revealed plans to buy back up to £3m of shares © Bloomberg

London-focused estate agent Foxtons is handing back cash to shareholders just months after tapping them for emergency funds, in a sign of how rapidly the UK housing market has recovered.

Earlier this year, the agent turned to investors for a £22m fundraising as it warned that revenues could collapse as much as 78 per cent.

But on Friday it increased its profit forecast and revealed plans to buy back up to £3m of shares. The company said it expected to make an adjusted operating profit of £1m-£1.5m in 2020, having posted a £700,000 loss in 2019.

Covid-19 restrictions on housing transactions were lifted in May and strong demand from buyers and the government’s stamp duty holiday have led to a surge in sales.

Foxtons’ share price has soared about 40 per cent since a low of 31.5p in May.

The company posted £83.6m revenue in the 11 months to the end of November, 15 per cent below the same period a year earlier. But signs of recovery are evident, with revenue in October and November up 2 per cent on the previous year’s figures, as offers on homes made earlier in the year reach exchange and completion.

Rival agent LSL Property Services said on Friday that its pipeline of residential property sales in train on October 31 was the highest it had seen “in over ten years and was more than 50 per cent above the same date in 2019”.

But LSL warned that a surge in demand since May had created a bottleneck of property sales, with a shortage of conveyancers extending the time taken between the exchange of contracts on a sale to completion.

Shares in both agents rose about 2 per cent on Friday morning.

The uptick in demand for property since May has also boosted housebuilders.

Bellway Homes, a FTSE 250 builder, said on Friday that it was capitalising on the recovery by increasing the number of new houses it will build this year by 25 per cent. In the 12 months to July 31 2020, the company built 7,522 properties.

Bellway has orders for 6,186 homes with a value of almost £1.8bn, and said demand for its properties continued to outstrip levels experienced last year.

However, the company cautioned that uncertainty over Brexit, changes to rules around the government’s Help to Buy scheme and coronavirus made the outlook unclear.

“Right now, the housebuilders and the estate agents seem pretty chipper,” said Alastair Stewart, a property analyst. But with the stamp duty holiday ending in March and the risk of a no-deal Brexit rising, it was hard to say how long the strong sales market would continue, he added.

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